Sensex, Nifty crash 1.2%, VIX surges 25%: Where should investors go long amid West Asia war? Here's what analysts say

Stock market today news: Sensex, Nifty see profit booking in trade. 

• Sensex and Nifty fell over 1 percent amid West Asia tensions.
• India VIX jumped 25%, indicating high market volatility.
• Analysts advise caution and disciplined risk management.

Did our AI summary help?

The equity benchmark indices Sensex and Nifty declined over 1 percent on Monday as a sharp spike in crude oil prices amid escalating tensions in West Asia dampened investor sentiment. Weak global cues and sustained foreign fund outflows added to the pressure.

The Sensex plunged 2,743.46 points or 3.37 percent to 78,543.73 in early trade. It later recovered some losses but still ended 1,048.34 points or 1.29 percent lower at 80,238.85.

The broader Nifty tumbled 575.15 points or 2.28 percent to 24,603.50 during the day. The benchmark later settled 312.95 points or 1.24 percent down at 24,865.70.

The India VIX, which measures market expectations of near-term volatility and is often referred to as the fear gauge, surged over 25 percent to 17.13. A rise in the index indicates heightened uncertainty and expectations of sharper price swings in the market.

Analysts said corrections triggered by geopolitical events are usually sharp but tend to be temporary once clarity emerges.

Prashasta Seth, CEO, Prudent Investment Managers, said heightened geopolitical tensions following recent war-related developments have led to sharp corrections in domestic indices.

"While headlines have amplified uncertainty, history suggests that war-led drawdowns are often sharp but temporary, with markets stabilising once clarity emerges.

"In this environment, the priority is disciplined risk management rather than reactionary decisions. Asset allocation must remain aligned with long-term objectives. If equity exposure has declined due to market underperformance over the past 15 months, investors may consider a calibrated 3–5 percent shift towards equities during the current drawdown," he said.

He added that companies with strong balance sheets, low leverage, resilient cash flows and pricing power are better placed to navigate earnings disruptions and should form a significant part of portfolios.

Seth further said the risk-reward trade-off for smallcaps and microcaps has turned favourable. "Though there may be near-term uncertainty, medium-term returns are likely to be good in this segment. Strong economic performance, rate cuts and liquidity measures by the RBI, along with reform measures by the government, could support earnings recovery in FY27. Smallcaps and microcaps typically perform well in such an environment," he noted.

He also advised adopting a staggered investment approach over the next four to eight weeks instead of attempting to time the market bottom.

Dr Ravi Singh, Chief Research Officer at Master Capital Services Ltd, said the near-term bias remains negative as long as geopolitical tensions persist and crude prices stay elevated.

"Volatility is likely to continue and traders should remain cautious. Such geopolitical reactions typically do not last very long unless the situation escalates materially. From a technical perspective, 24,500 is a crucial support level for Nifty. A sustained breakdown below this could trigger further selling pressure. Recovery attempts may face resistance near recent breakdown levels. Investors should avoid aggressive long positions and wait for stability in global cues before rebuilding exposure. Defence stocks may continue to show relative strength," he said.

Ajit Mishra, SVP, Research, Religare Broking Ltd, said the sharp decline has pushed the Nifty closer to its swing low around the 24,600 level.

"A decisive break below this could extend the correction towards the 24,400 mark. On the upside, the 25,000–25,250 zone is likely to act as an immediate hurdle in case of any recovery. Given the heightened volatility and global uncertainty, investors should maintain a cautious stance, keep position sizes light and focus on disciplined risk management," he said.

On Friday, the Sensex had declined 961.42 points or 1.17 percent to settle at 81,287.19. The Nifty fell 317.90 points or 1.25 percent to close at 25,178.65.

Equity markets will remain closed on Tuesday on account of Holi.